A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

February 21, 2007

Yes, it's time to make some noise. How many more lenders need to implode until everyone is awoken from their slumber.

IT'S ALL FALLING APART NOW FOLKS. FAST. HARD. AND BAD. THE GREAT UNWINDING IS HERE. THE UNITED STATES HOUSING MARKET PONZI SCHEME IS CRASHING. FRAUD IS RAMPANT. FLIPPERS ARE F*CKED. THE SYSTEM GOT GAMED. AND THE MONEY AIN'T GETTIN' PAID BACK.

There. I hope that helps. If it didn't, read Fleck's post this week (written before Novastar melted down today):

The housing ATM rot is just the beginning - Lenders New Century and HSBC finally admit problems, but the bulls still don't want to see the obvious: A negative economic reaction is inevitable.

From New Century came word that (a) its financials were basically no good and that (b) it hadn't properly accounted for loans it had sold to other institutions and that might now be sent back.

Even more important was the news from HSBC, regarded as a good operator, which revealed that it was going to take its mortgage loan-loss reserves from $8.8 billion and change to $10.6 billion and change

"Its systems for screening subprime borrowers and for assessing the default risk they posed were flawed. Many of those loans have soured, sometimes quickly. The percentage of HSBC mortgages more than 60 days past due is climbing. Fraud by borrowers has been higher than expected."

Yes, there is a consequence To which I would respond: No kidding. How clever, how smart, how awake did you have to be to know that that was going on and that this was going to be the outcome?

Even though stock market participants have been willing to suspend disbelief, we still face the problem of an unwinding real-estate market, its impact on the economy and its impact on the stock market. Of course, the latter would also reinforce the prior two problems.

As I said, all of these problems have been hiding in plain sight. But the fact that folks want to pretend the problems don't matter -- and push out the moment in time when they react -- doesn't change the reality that the risks are extraordinarily high these days. Pretending will only make the dislocation bigger.

The recent collapse in the shares of New Century demonstrates what I expect to happen literally any day now in technology and the tape at large, although predicting when is impossible. Folks should not underestimate the power of the trickle-up in the rot from the housing ATM finance mechanism.

In case someone is actually listing for sirenes or some other audible crash sound it's not going to happen.

If you are a borrower who is in debt up to their eyeballs you are the one fealing the pain. Noone is going around talking about how they just lost there home to foreclosure or lost there retirement from selling there home.

Trust me the pain is real and real people are in serious trouble. I am a CPA and I am seeing the form 1098s coming in in Los Angeles and the amounts are staggering compared to the adjusted gross income. I expect to be filing many returns with cancellation of debt income for 2007.

Doug Kass at Seabreeze Capital has been saying for several weeks that the "rot" won't stop here! Countrywide's Alt-A paper is under review for down-grade as well.

You just get so worn out trying to explain to people w/decent credit scores and stable employment that they are *not* immune. Mortgage firms "leveraged" those great fico's to the hilt in every way they could. True, it will "start" with the sub paper but I'm willing to bet it won't end there.

Hi HP greetings from Aotearoa(otherwise known as New Zealand)just down to and left from your West Coast.)Just a microcosm of USA.Most of the population here are blissfully ignorant of what is occurring in the USA re mortgages etc.Some say the market here will be sustained by rich americans buying up large.Cannot see that happening now.Shania Twain bought a property here a few years ago for 40 million dollars.By way of disclosure I am one of those better renters who has not prospered through the misery of others but feeling better now.As your Justin Timberlake says what goes around comes around.

Save my baby! Save my baby! The fire just came out of nowhere. One minute I was watching a movie on how to get rich without working, then all of a sudden the theater was ablaze....When I called 911 they said "We'll send the Fed right out" WTF the Fed were the ones smoking in the theater to begin with!

The median or average cost of a home in the US seemed to be about 200,000 - 210,000 the last time I remember checking. How low do you think this mess will go?

Phoenix was about as crazy as Vegas, betting on OO, betting that no one would notice that home prices were growing faster than incomes or rents. They were crazy in 88 and crazy again in 05. One city does not make the national market.

Hi everyone, I Edgar would like to predict something for you, late April or early May we will start a war with Iran, it will be a false flag to blame the economy on something other than what it is. Oil and Gas will go to new heights. Please, please save your cash, prepare, short the market if you want to benefit. Peace & Love

I watched a bit of Bubble Vision today (CNBC) and before I clicked it off, I saw one of the hosts quiz a couple of "analysts" about the current subprime problem. Both analysts agreed that subprime is a niche in the total real estate market and there are no long term problems.

I think the hedge funds are trying to schnitzel out of some of these stocks without collapsing their own huge positions. But who am I? Just a degraded renter who sleeps on a ratty, smelly couch I found in a dumpster.

Gold reached 686.00 today. Normally silver and gold have been following a cyclical 10 week build up, collapse cycle (with an overall uptrend) but if equities are in trouble the upcoming gold/silver profit taking might not occur.

While a panic is not happening, I see no valid reason why anyone would want to stay in CFC, LEND when the rest of the market is hitting all time highs. If you are invested in any mortgage lenders you are warned. Don't come whining about how you didn't know.

Perhaps imploding may not be the best technical term. How about failing or bankrupt? The effects will be felt elsewhere--they were w the S&L which was miniscule compared to the present bubble. Also, note that the BOJ raised rates so solving by government intervention will not be cheap--creidit crunch will be severe--i.e. if BOJ raises rates fed will have to raise rates--poor ARM holders!

Go buy ya smore KB ,Beazer,whatever ya like,Liquidate all you got and put your money where your mouth is and load up.There is a very real shortage of silver,but a huge and growing glut of homes,So load up on some Toll,and KB,and gets some Beazer.Gold production is flat to down,Homes outpace demand by 2million,So go get some Beazer,HAV or WETF you like.Do it through your 401k to lock it in out of your reach until it matures like your broker said it would.Your right ,so make us into fools and get wealthy beyond your wildest dreams(coma)then come a braggen while we weep(in hysterics)about all the money we didn't make.Retire early (dead) when you see the astonishing results of financial wizardry(alchemy)that you cling to.One thing that sucks about gold ,and silver is the fact that they are so boring to watch(NOT!)while housing explodes to and fro from plateau to plateau (thud)(clank).Don't worry about taxes,and the fact you cant hide your gains(so massive),cuz keeping gold ,silver,or swiss franc under lock ,and key makes for such a boring(blissful piece of mind)way to flaunt your wealth(Debt is wealth Har Har)Besides ,dinner parties,go great with the Parroting of stock,and real estate(fake land,and assets)prices,name of your famous broker(buy,and hold extraordinaire),and your knowledge of caviar.(you sure as hell didn't buy it),or did you?Gold and silver will one day bubble too(I'll be out ahead of time) but for now they both have protected my hard earned gains very well.But damn I could have been rich(frantically trying to keep it).Get you some KB Baby,that's the real shizzle there.OH yeah.

I think Casey is going off the deep end. His problem is he's millions in debt and no way to service the debt. He's in this trouble because he made a bunch of bad real estate deals. His solution is to borrow more money and service the debt by making more real estate deals. I'll give him credit for one thing, he's certainly not a quitter.